H1'08 - Interim Report by Riccardo Fava

2008

DIASORIN GROUP SEMIANNUAL REPORT AT JUNE 30, 2008

Diasorin S.p.A. Via Crescentino (no building No.) - 13040 Saluggia (VC) - Tax I.D. and Vercelli Company Register No. 13144290155

Report 1 half st

Contents Board of Directors, Board of Statutory Auditors and Independent Auditors

Consolidated financial highlights

Interim report on operations Review of the Groupâ&#x20AC;&#x2122;s operating performance and financial position Operating performance in the second quarter of 2008 Operating performance in the first half of 2008 Net revenues Operating performance Financial income and expense Result before taxes and net result Analysis of Consolidated Cash Flow Analysis of Consolidated Net Borrowings Other Information

p. p. p. p. p. p. p. p. p. p. p.

9 9 9 11 13 17 18 18 19 20 20

Transactions with related parties

p. 21

Progress report on the Companyâ&#x20AC;&#x2122;s program to comply with the listing requirements set forth in Articles 36 and 39 of the Market Regulations

p. 23

Significant events occurring after june 30, 2008 and business outlook

p. 25

Abbreviated semiannual consolidated financial statements at june 30, 2008 Consolidated income statement Consolidated cash flow statement Consolidated statement of changes in shareholdersâ&#x20AC;&#x2122; equity Breakdown of total consolidated profit (loss) Notes to the abbreviated semiannual consolidated financial statements at June 30, 2008 and June 30, 2007

p. p. p. p. p. p.

Annex I: The companies of the Diasorin Group at June 30, 2008

p. 49

Certification of the abbreviated semiannual consolidated financial statements pursuant to Article 81-ter of Consob Regulation No. 11971 of May 14, 1999, as amended

p. 51

Financial statements of Diasorin S.p.A. at June 30, 2008 and 2007

p. 53

27 28 31 32 32 33

2008

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Board of Directors, Board of Statutory Auditors and Independent Auditors

Board of Directors (elected on March 26, 2007) Chairman Executive Deputy Chairman

Gustavo Denegri Antonio Boniolo

Chief Executive Officer

Carlo Rosa (1)

Directors

Giuseppe Alessandria (2) Chen Menachem Even Enrico Mario Amo Ezio Garibaldi (2) Michele Denegri Franco Moscetti (2)

Board of Statutory Auditors

(1) (2)

Chairman

Luigi Martino

Statutory Auditors

Bruno Marchina Vittorio Moro

Alternates

Alessandro Aimo Boot Maria Carla Bottini

Independent Auditors

Deloitte & Touche S.p.A.

General Manager Independent Director

2008

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Consolidated financial highlights

in thousands of euros

First as a First as a Second as a Second as a quarter % of quarter % of quarter % of quarter % of 2008 rev. 2007 rev. 2008 rev. 2007 rev.

First as a half % of 2008 rev.

First as a half % of 2007 rev.

Net revenues

56,638

100

49,887

100

59,628

100

52,273

100

116,266

100

102,160

100

EBITDA

19,191

33.9

15,407

30.9

20,497

34.4

16,234

31.1

39,688

34.1

31,641

31.0

EBIT

15,682

27.7

11,924

23.9

16,957

28.4

12,695

24.3

32,639

28.1

24,619

24.1

Net result

10,141

17.9

6,763

13.6

10,123

17.0

6,973

13.3

20,264

17.4

13,736

13.4

Adjusted EBITDA

19,191

33.9

16,792

33.7

20,966

35.2

16,987

32.5

40,157

34.5

33,779

33.1

Adjusted EBIT

15,682

27.7

13,309

26.7

17,426

29.2

13,448

25.7

33,108

28.5

26,757

26.2

in thousands of euros Total assets Net borrowings Shareholdersâ&#x20AC;&#x2122; equity

At 6/30/08

At 12/31/07

225,017

208,328

9,442

12,131

132,647

120,273

2008

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Interim report on operations Review of the Group’s operating performance and financial position Foreword This Semiannual Financial Report at June 30, 2008 was prepared in accordance with Article 154-ter of the Uniform Financial Code and Article 81 of Consob Resolution No. 11971/99, as amended (the “Issuers’ Regulations”). It is also consistent with the requirements of the International Financial Reporting Standards (IFRS), as published by the International Accounting Standards Board (“IASB”), and was prepared in accordance with IAS 34 – Interim Financial Reporting. With regard to the composition of gross profit, some of the items that were included in last year’s computation have been reclassified in accordance with the presentation criteria adopted this year, which reflect a more accurate allocation of such items, consistent with sound management criteria. This Semiannual Financial Report is the subject of a limited audit pursuant to Article 81, Section 1, of the Issuers’ Regulations. However, the 2008 data were not audited.

The foreign exchange market The exchange rates for the first half of 2008 show that the euro appreciated significantly versus some of the currencies that have an impact on the Group’s operations, the U.S. dollar in particular, but lost value versus the Brazilian real. The table below provides a comparison between the exchange rates for the first six months of 2008 and the same period last year (source: Italian Foreign Exchange Bureau): First half 2008

First half 2007

Average

Actual

Average

U.S. dollar

1.5304

1.5764

1.3291

Actual 1.3505

British pound

0.7752

0.7923

0.6746

0.6740

Brazilian real

2.5946

2.5112

2.7186

2.5972

Swedish kronor

9.3753

9.4703

9.2228

9.2525

Mexican peso

16.2399

16.2298

14.5523

14.5706

Israeli shekel

5.3875

5.2820

5.5179

5.7416

Operating performance in the second quarter of 2008 In the second quarter of 2008, the Diasorin Group reported a 14.1% increase in revenues compared with the same period last year, showing a faster growth rate than in the first three months of the year, when revenues improved by 13.5 percentage points compared with the first quarter of 2007. The appreciation of the euro versus other currencies and the U.S. dollar in particular continued to have a dampening effect on revenue growth in the second quarter of 2008. Restated using constant exchange rates (second quarter of 2007), revenues show a gain of 19%.

2008

The increase in revenues is chiefly the result of higher sales of CLIA products, which rose by 29.8 percentage points during the quarter. This improvement reflects a steady expansion of the installed base of LIAISON systems, which grew to about 2,280 installed units at June 30, 2008, up from 2,160 units at March 31, 2008. During the second quarter of 2008, sales of CLIA technology reagents accounted for 57.3% of total revenues. The profitability indicators showed a further improvement compared with the second quarter of 2007, even though the gross profit ratio was down slightly due mainly to higher royalty costs, the effect of the extraordinary gains recorded in the second quarter of 2007 as a result of the reforms of the severance benefits system and the negative impact of a falling U.S. dollar. Consolidated EBITDA grew by 26.3% in the second quarter of 2008, rising from 16,234,000 euros at June 30, 2007 to 20,497,000 euros in the second quarter of the current year. The consolidated operating result (EBIT) increased by 33.6% to 16,957,000 euros, up from 12,695,000 euros in the second quarter of 2007. Both in 2007 and 2008, EBITDA and EBIT figures include the impact of non-recurring income and expense items: in the second quarter of 2007, the Company incurred non-recurring charges totaling 1,268,000 euros in connection with the listing of its shares on the Online Stock Market, offset in part by a non-recurring gain of 515,000 euros recognized by the Groupâ&#x20AC;&#x2122;s Parent Company for the reform of the severance benefit system; in 2008, charges totaling 469,000 euros were incurred in connection with the acquisition of the Biotrin Group, which was completed on July 9, 2008. Restated net of these non-recurring items, EBITDA for the second quarter of 2008 amount to 20,966,000 euros, for a gain of 23.4 percentage points over the amount for the same period last year (16,987,000 euros). On the same basis, EBIT for the quarter increase by 29.6% to 17,426,000 euros, compared with 13,448,000 euros in the second quarter of 2007 Lastly, the net result for the three months ended June 30, 2008 amounted to 10,123,000 euros, or 45.2% more than the amount reported a year earlier. The table that follows shows the consolidated income statement for the quarters ended June 30, 2007 and June 30, 2008:

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CONSOLIDATED INCOME STATEMENT (in thousands of euros)

Second quarter 2008

2007

59,628

52,273

Cost of sales

(20,825)

(17,871)

non-recurring amount Gross profit

38,803 65.1% (11,664) (3,102) (6,470) (21,236) (35.6%) (610) (469) 16,957 28.4% (837) 16,120 (5,997) 10,123 17.0% 20,497 34.4%

Sales and service revenues

Sales and marketing expenses Research and development costs General and administrative expenses Total operating expenses

non-recurring amount Other operating income (expenses)

non-recurring amount Operating result (EBIT) Net financial income (expense) Result before taxes Income taxes Net result EBITDA (1)

216 34,402

65.8% (11,528) (2,847) (6,127) (20,502) (39.2%) 299 (1,205) (1,268) 12,695 24.3% (1,312) 11,383 (4,410) 6,973 13.3% 16,234 31.1%

(1) The Board of Directors defines EBITDA as the “result from operations” before amortization of intangibles and depreciation of property, plant and equipment.

Operating performance in the first half of 2008 The Diasorin Group reported highly satisfactory results for the first half of 2008. Revenues were up significantly compared with the same period last year, even though the rate of increase was affected by the considerable appreciation of the Group’s consolidation currency versus other currencies, the U.S. dollar in particular. Revenues for the first half of 2008 were 13.8% higher than in the same period last year. If the data are stated at constant exchange rates (average for 2007), the increase is 18.4%. The gain in revenues is being driven chiefly by higher sales of CLIA technology products, which grew by 31.9 percentage points in 2008. This improvement was made possible by a steady expansion of the installed base of LIAISON systems (about 210 new analyzers were installed during the first half of the year) and by an expansion of this platform’s product

2008

line (during the first six months of 2008, two new products were launched in Europe and other countries that acknowledge the CE mark). Sales of CLIA technology reagents accounted for 57.0% of total revenues at June 30, 2008. The gross profit increased to 75,387,000 euros, for a gain of 13.5 percentage points compared with the 66,395,000 euros earned in the first half of 2007. At June 30, 2008, the ratio of gross profit to revenues was 64.8%, about the same as a year earlier. Consolidated EBITDA totaled 39,688,000 euros in the first six months of 2008, up from 31,641,000 euros in the same period last year. As a result, the ratio of EBITDA to revenues improved from 31% at June 30, 2007 to 34.1% at June 30, 2008. In the first half of 2007, the consolidated operating result (EBIT) rose to 32,639,000 euros, an amount equal to 28.1% of revenues, compared with 24,619,000 euros (24.1% of revenues) in the first six months of 2007. Last year’s EBITDA and EBIT figures reflected the impact of non-recurring expenses related mainly to the process of listing the Company’s shares on the Online Stock Market. In 2008, non-recurring items include charges incurred in connection with the acquisition of the Biotrin Group, which was completed on July 9. Restated net of these non-recurring items, cumulative EBITDA for the first six months of 2008 show a gain of 18.9 percentage points, totaling 40,157,000 euros compared with 33,779,000 euros in the same period last year. Net of the same non-recurring items, EBIT for the first half of 2008 amounted to 33,108,000 euros, or 23.7 percentage points more than the 26,757,000 euros earned in the same period last year. Lastly, the cumulative net result for the six months ended June 30, 2008 totaled 20,264,000 euros, or 47.5% more than at June 30, 2007. The ratio of net profit to revenues was also up, rising to 17.4%, or 4 percentage points more than at June 30, 2007. Basic earnings per share, which amounted to 0.37 in the first half of 2008, were computed by dividing the Company’s interest in net profit by the average number of shares outstanding (55 million). The stock option plan in effect at June 30, 2008 had no dilutive effect on earnings per share. A consolidated income statement with data for the six months ended June 30, 2007 and 2008 is provided on the following page:

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CONSOLIDATED INCOME STATEMENT (in thousands of euros)

First half 2008 (*)

2007 (*)

Net revenues

116,266

102,160

Cost of sales

(40,879)

(35,765)

non-recurring amount Gross profit

75,387 64.8% (22,931) (6,191) (12,828) (41,950) (36.1%) (798) (469) 32,639 28.1% (258) 32,381 (12,117) 20,264 17.4% 39,688 34.1%

Sales and marketing expenses Research and development costs General and administrative expenses Total operating expenses

non-recurring amount Other operating income (expenses)

non-recurring amount Operating result (EBIT) Net financial expense Result before taxes Income taxes Net result EBITDA (1)

216 66,395

65.0% (21,968) (5,408) (11,525) (38,901) (38.1%) 299 (2,875) (2,653) 24,619 24.1% (2,114) 22,505 (8,769) 13,736 13.4% 31,641 31.0%

(*) Data subjected to a limited audit. (1) The Board of Directors defines EBITDA as the “result from operations” before amortization of intangibles and depreciation of property, plant and equipment.

Net revenues In the second quarter of 2008, net revenues increased to 59,628,000 euros, for a gain of 7,355,000 euros compared with the same period last year. This year-over-year increase of 14.1% shows that the pace of growth accelerated compared with the previous quarter, when the rate of increase was 13.5 percentage points. For the first six months of 2008, consolidated net revenues totaled 14,106,000 euros, or 13.8% more (at constant exchange rates) than in the comparable period a year ago. The Group’s program of geographic expansion and higher sales of CLIA technology products account for this increase. As mentioned earlier in this Report, changes in the exchange rates between the euro and other currencies had a negative impact of about 4 percentage points.

2008

Breakdown of revenues by geographic region The table below provides a breakdown of the consolidated revenues of the Diasorin Group by geographic region of destination: (in thousands of euros)

Second quarter 2008

2007

First half % change

2008

2007

Italy

13,367

12,470

7.2%

26,928

23,997

12.2%

Rest of Europe

21,751

19,008

14.4%

42,759

37,724

13.3%

North America (United States and Canada)

13,686

11,718

16.8%

26,369

22,015

19.8%

Rest of the world

10,824

9,077

19.2%

20,210

18,424

9.7%

Total

59,628

52,273

14.1%

116,266

102,160

13.8%

Italy Revenues booked in Italy in the second quarter of 2008 totaled 13,367,000 euros, or 7.2% more than in the same period last year. First-half revenues show a year-over-year gain of 2,931,000 euros, equal to 12.2 percentage points. The installed base of LIAISON systems grew to about 640 units. In the first six months of 2008, the Italian market generated revenues totaling 26,928,000 euros, accounting for 23.2% of total consolidated Group revenues.

Rest of Europe In the rest of Europe (i.e., excluding Italy), the revenues reported by the Group in the second quarter of 2008 were higher by 2,743,000 euros (+14.4 percentage points) than in the same period a year ago. Cumulative revenues at June 30, 2008 show an increase of 5,035,000 euros. The main European subsidiaries showed steadily higher growth during the first half of 2008, with year-over-year gains of 13.5% for Belgium, 9.3% for France and 8.3% for Germany. The performance of the French operations during the second quarter was particularly noteworthy, with revenues increasing by 13.7 percentage points compared with the same period in 2007. In all countries, the revenue improvement was driven by an expansion of the installed base and higher sales of LIAISON platform products. The operations in the UK and Scandinavian markets posted significantly above average growth rates, as the marketing operations in those countries focused their efforts on specialized clinical areas in the segments of infectious diseases, hypertension and phospho-calcic metabolism. In Scandinavia, second quarter revenues rose by 80.1 percentage points compared with the previous year, producing a cumulative gain of 77.7 percentage points over the amount booked in the first half of 2007. The Group also increased revenues in the United Kingdom, posting a gain of 16.1 percentage points (at

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current exchange rates) in the first half of 2008. However, given the significant appreciation of the euro versus the British pound, the year-over-year gain improves to 32.4 percentage points when the data are restated at constant exchange rates. During the second quarter of 2008, the Group enjoyed particularly sustained growth in the countries where it operates through independent distributors, with revenues up by 61.6 percentage points in the second quarter of 2008 and 28 percentage points in the first half of the year. The best performances were recorded in Eastern Europe (which includes Russia, where Diasorin has been expanding since 2007) and Greece, where higher sales of LIAISON reagents account for most of the increase). As a result of the gains outlined above, the markets in the rest of Europe contributed 36.8% of the Groupâ&#x20AC;&#x2122;s consolidated revenues.

North America North America continued to be a key strategic market in terms of its impact as the engine of the Groupâ&#x20AC;&#x2122;s revenue growth. In the second quarter of 2008, revenues totaled 13,686,000 euros, or 16.8 percentage points higher than in the same period last year. At June 30, 2008, cumulative six-month growth was 19.8 percentage points. If the data are restated at constant exchange rates, the increase compared with the first six months of 2007 is 38 percentage points. The contribution of the North American market to the revenue increase reported by the Diasorin Group totaled 4,354,000 euros, an amount equal to 30.9% of the overall gain in consolidated revenues. The success achieved in North America is driven mainly by the rising revenues generated by tests to determine vitamin D levels (LIAISON VIT D), for which Diasorin is the market leader. These tests are becoming increasingly popular thanks to recent studies that have extended their clinical use to oncology-related areas and as a means of assessing the risk of the onset of heart diseases. Growth in the U.S. market also continues to benefit from the distribution agreement with Cardinal Health. Thanks to an extensive sales network throughout the United States, Cardinal Health has helped Diasorin Inc achieve a more effective coverage of its target market. In the first half of 2008, North American sales contributed 22.7% of the Diasorin Groupâ&#x20AC;&#x2122;s total revenues, up from 21.5% in the same period a year ago.

Rest of the world In markets other than Europe and North America, second quarter revenues totaled 1,747,000 euros in 2008, for a gain of 19.2 percentage points compared with the same period in 2007. In the first three months of 2008, revenues were in line with those reported a year earlier.

2008

Significant events that characterized the second quarter of 2008 included the success of the Brazilian subsidiary in bidding for an important public tender. With the supply of products beginning in May, this contract provided a significant contribution to the increase in the revenues achieved in Brazil (+19.8 percentage points). Cumulative revenues for the first six months of 2008 were up by 1.7 percentage points compared with the first half of 2007. In the markets targeted more recently for geographic expansion, the Mexican subsidiary boosted revenues by 32.1 percentage points. At June 30, 2008, the cumulative growth was 11.5%, despite the negative impact of unfavorable interest rates, which reduced growth by about 13 percentage points. In Israel, sales revenues rose to 1,407,000 euros in the first six months of 2008, for a gain of 39.3 percentage points compared with June 30, 2007. Revenues reported in the second quarter of 2008 were 54.3 percentage points higher than in the same period a year ago. In the regions in which the Group operates through independent distributors instead of a direct organization, revenues for the first half of 2008 increased by 12.5% compared with the same period last year, with the best results achieved in markets in the Middle East and Australia. Lastly, in the first six months of 2008, sales in the Chinese market rose by 21 percentage points compared with the first half of 2007 (23.4% at constant June 2007 exchange rates), reaching 2,770,000 euros, as the installed based grew to about 105 LIAISON analyzers, or 30 units more than at December 31, 2007.

Breakdown of revenues by technology Concurrently with its geographic expansion, the Group increased the revenues generated by the LIAISON closed platform. The table below, which is provided merely for information purposes, shows the percentage of consolidated revenues contributed by each technology in the first half of 2007 and 2008. % of revenues contributed 2nd quarter 2008 RIA ELISA

2nd quarter 2007

% of revenues contributed 1st half 2008

1st half 2007

9.9

11.7

10.0

12.0

22.2

27.6

22.0

28.8

CLIA

57.3

50.4

57.0

49.1

Equipment and other revenues

10.6

10.3

11.0

10.1

100.0

Total

In the second quarter of 2008, the revenues generated by LIAISON products were 7,846,000 euros higher than in the same period last year. This increase of 29.8 percentage points brought the cumulative gain for the first half of the year to 16,024,000 euros (+31.9 percentage points compared with the first six months of 2007).

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The percentage of total Group revenues contributed by sales of products based on CLIA technology reached 57 percentage points at June 30, 2008, or 7.9 percentage more than a year earlier. At June 30, 2008, about 2,280 automated LIAISON analyzers, or about 210 more than at December 31, 2007, were installed at facilities operated by direct and indirect customers of the Group.

Operating performance The gross profit of the Diasorin Group grew from 34,402,000 euros in the second half of 2007 to 38,803,000 euros in the same period this year, for a gain of 12.8 percentage points. In a temporary setback, the ratio of gross profit to revenues decreased compared with the previous year, falling from 65.8 percentage points to 65.1 percentage points. The rising contribution provided to total revenues by LIAISON products (which have higher margins than those based on RIA and ELISA technologies) and a steady reduction in the impact of the depreciation of equipment made possible by the optimization of product sales on the installed base are the factors that continue to drive the improvement in margins. However, in the second quarter of 2008, these positive factors were offset by an increase in the impact of royalty expenses (0.7 percentage points in the second quarter), which occurred due mainly to the renewal of a major licensing contract on more onerous terms than a year ago. This additional cost was only partially reflected on sales prices during the second quarter. In addition, in the second quarter of 2007, the gross profit was boosted by a non-recurring gain recognized by the Groupâ&#x20AC;&#x2122;s Parent Company as a result of the reform of the employee severance benefit system, which had a positive impact of 0.4 percentage points. As a result of the developments discussed above, the cumulative gross profit grew by 13.5%, rising from 66,395,000 euros (65% of revenues) at June 30, 2007 to 75,387,000 euros at June 30, 2008 (64.8% of revenues). In the second quarter of 2008, operating expenses increased by 3.6 percentage points to 21,236,000 euros. However, while up in absolute terms, their impact as a percentage of revenues shrank to 35.6 percentage points, down from 39.2 percentage points in the second quarter of 2007. In the second quarter of 2008, the increase recorded in sales and marketing expenses was proportionally smaller than the gain in revenues, causing their ratio to revenues to decrease by 2.5 percentage points compared with the three months ended June 30, 2007. As a result, at June 30, 2008, the ratio of sales and marketing expenses to revenues was 19.6 percentage points, down from 22.1 percentage points in the first half of 2007. In the second quarter and first half of 2008, the ratio of research and development costs to revenues held steady (about 5.3 percentage points) compared with the corresponding periods last year. Lastly, in the second quarter of 2008, general and administrative expenses increased at a much slower rate than in the first three months of the year, when the Group incurred costs related to the reorganization of the English subsidiary, which on May 1, 2008 sold to Diasorin AB, a Swedish company, its distribution rights for England and Ireland and the correspon-

2008

ding assets. Compared with the corresponding periods in 2007, general and administrative expenses increased by 5.6 percentage points in the second quarter of 2008 and 11.3 percentage points for the first six months of the year. In the second quarter of 2008, the consolidated operating result (EBIT) totaled 16,957,000 euros, or 33.6 percentage points more than in 2007. In the same periods, the ratio of consolidated EBIT to revenues improved from 24.3 percentage points in 2007 to 28.4 percentage points this year. Cumulative EBIT grew to 32,639,000 euros, for a gain of 32.6 percentage points in the first six months of 2007. At 20,497,000 euros, second quarter EBITDA were 26.3 percentage points higher than in the same period in 2007, causing the ratio of consolidated EBITDA to revenues to improve from 31.1 percentage points in 2007 to 34.4 percentage points this year. Cumulative EBITDA rose to 39,688,000 euros, for a gain of 25.4 percentage points compared with the first half of 2007. If the data are restated to eliminate the impact of the non-recurring income and expense items referred to above on consolidated EBITDA and EBIT, the ratio of these two items to revenues at June 30, 2008 becomes 34.5 percentage points (33.1 percentage points in 2007) and 28.5 percentage points (26.2 percentage points in 2007), respectively.

Financial income and expense In the second quarter of 2008, net financial expense totaled 837,000 euros, down from 1,312,000 euros in the same period last year. The cumulative net financial expense at June 30, 2008 amounted to 258,000 euros, compared with 2,114,000 euros in the first six months of 2007. In the first six months of 2008, interest and other financial expense totaled 2,285,000 euros (this amount includes 1,045,000 euros in factoring commissions paid by the Groupâ&#x20AC;&#x2122;s Parent Company and pension fund interest charges of 452,000 euros). The net impact of foreign exchange differences on the Groupâ&#x20AC;&#x2122;s financial assets and liabilities denominated in currencies other than the euro was positive by 1,887,000 euros (230,000 euros in the second quarter of 2008).

Result before taxes and net result The second quarter of 2008 ended with a result before taxes of 16,120,000 euros and a tax liability of 5,997,000 euros. The pretax amount was greater than in the same period in 2007, when it totaled 11,383,000 euros, subject to a tax liability of 4,410,000 euros. In the first half of 2008, the result before taxes increased to 32,381,000 euros and the resulting tax liability amounted to 12,117,000 euros. In the same period in 2007, the corresponding amounts were 22,505,000 euros and 8,769,000 euros, respectively.

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The tax rate decreased to 37.4 percentage points at June 30, 2008, down from 39 percentage points in the first six months of 2007, due mainly to a reduction of the tax rates in Italy and Germany. The consolidated net result for the first half of the year amounted to 20,264,000 euros in 2008, up from 13,736,000 euros in 2007.

Analysis of Consolidated Cash Flow A table showing the consolidated cash flow statement, followed by a review of the main statement items and the changes that occurred compared with the first half of 2008, is provided below: 2nd quarter

(in thousands of euros)

1st half

2008

2007

2008

2007

13,094

12,003

8,367

8,718

Net cash from operating activities

6,212

4,859

14,373

12,317

Cash used for investing activities

(3,643)

(4,201)

(6,327)

(8,057)

Cash used for financing activities

(1,571)

(3,087)

(2,321)

(3,404)

Net change in cash and cash equivalents Cash and cash equivalents at end of period

998

(2,429) 9,574

5,725

856

14,092

9,574

Cash and cash equivalents at beginning of period

The cash flow from operating activities increased from 12,317,000 euros in the first half of 2007 to 14,373,000 euros in 2008. More specifically, trade receivables were up, consistent with the growth in revenues, and the inventory increase was smaller than in the first six months of 2007. In addition, payments made to strategic suppliers in the first half of 2008 were higher than in the same period last year, when, however, accounts payable increased due to non-recurring charges incurred to list the Company’s shares. Lastly, income tax payments totaled 10,021,000 euros, compared with 8,573,000 euros in the first six months of 2007. The cash used for investing activities, which amounted to 6,327,000 euros, was less than in the first half of 2007 due to the following factors: • a decrease in capitalizations of instrument costs, offset by higher sales to distributors; • a reduction in the purchase price of LIAISON systems; • a decrease in capitalizations of intangible assets consisting mainly of development and software costs (the amount capitalized in the first half of 2007 included the costs incurred to implement the SAP R/3 system on the Group’s shared platform). The cash used for financing activities was also down compared with the first six months of 2007, as the Group’s decision to minimize the use of finance leases in 2007 reduced lease payments in the first half of 2008. In addition, loan installments paid to Interbanca decreased, following an early repayment at the end of 2007.

2008

In the second quarter of 2008, the cash and cash equivalents held by the Group increased by 998,000 euros, as against a negative change of 2,429,000 euros in the same period in 2007. This improvement is the result of the following factors: • a sharp increase in the operating income generated during the abovementioned quarter, offset in part by an unfavorable change that occurred in working capital because, for the reasons explained above, the increase in accounts payable was smaller than in the second quarter of 2007; • a decrease in loan repayments due to a revision of the amortization plan for the abovementioned Interbanca financing facility; • the abovementioned reduction in investments in other intangible assets. At June 30, 2008, the cash and cash equivalents held by the Group totaled 14,092,000 euros, up from 8,367,000 euros at the end of 2007.

Analysis of Consolidated Net Borrowings (in thousands of euros) Cash and cash equivalents Liquid assets (a) Current bank debt Other current financial obligations Current indebtedness (c) Dividends payable (c) Net current indebtedness (d)=(a)+(b)+(c) Non-current bank debt Other non-current financial obligations Non-current indebtedness (e) Net borrowings (f)=(d)+(e)

At June 30, 2008

At June 30, 2007

(14,092)

(8,367)

(14,092)

(8,367)

2,936

3,001

1,827

2,097

4,763

5,098

5,500

(3,829)

(3,269)

10,914

12,575

2,357

2,825

13,271

15,400

9,442

12,131

At June 30, 2008, consolidated net borrowings totaled 9,442,000 euros. This amount includes 5,500,000 euros in dividends payable pursuant to a resolution approved by the Ordinary Shareholders’ Meeting of April 24, 2008 and payable as of July 17, 2008. Net of the dividend liability, the Group’s net borrowings show a decrease of 8,189,000 euros compared with December 31, 2007.

Other Information At June 30, 2008, the Group had 964 employees, or 36 more than at the end of 2007, when 928 employees were on its payroll.

Report 1 half st

Transactions with related parties In the normal course of business, Diasorin S.p.A. engages on a regular basis in commercial and financial transactions with its subsidiaries, which are also Group companies. These transactions, which are executed on standard market terms, consist of the supply of goods and services, including administrative, information technology, personnel management, technical support and consulting services, which produce receivables and payables at the end of the year, and financing and cash management transactions, which produce income and expenses. These transactions are eliminated in the consolidation process and, consequently, are not discussed in this section of the Report. At June 30, 2007, the following transactions had been executed with Diasorin LTD, an unconsolidated Chinese subsidiary: â&#x20AC;˘ receivables of 21,000 euros; â&#x20AC;˘ liabilities of 86,000 euros; â&#x20AC;˘ costs totaling 430,000 euros for sales and technical support provided to local distributors. The compensation payable to senior managers and eligible employees (key management) is consistent with standard market terms for compensation offered to employees with a similar status. Employees are also awarded incentive payments tied to the achievement of corporate or personal targets and bonuses predicated on the achievement of a predetermined length of service. The cost incurred for stock options and for compensation paid to Group executives with strategic responsibilities amounted to 855,000 euros in 2008 (including 200,000 euros for share-based payments) and 1,075,000 euros in 2007 (including 451,000 euros for share-based payments). Fees paid to Directors and Statutory Auditors in the first half of 2008 totaled 290,000 euros (265,000 euros in the first six months of 2007).

2008

Report 1 half st

Progress report on the Company’s program to comply with the listing requirements set forth in Articles 36 and 39 of the Market Regulations With regard to compliance with the requirements for the listing of shares introduced by Article 36 of the regulations adopted by the Consob with Resolution No. 16191 of October 29, 2007, the issuer Diasorin S.p.A., in its capacity as the controlling company of subsidiaries among which there are companies that, while established in accordance with and governed by the laws of countries that are not members of the European Union, are materially relevant for the purpose of complying with the provisions of Title VI, Chapter II, of the regulations adopted by the Consob with Resolution No. 11971 of 1999, as amended, discloses that, as of the date of this Report, it has already taken actions in the following areas: a) It makes available to the public the accounting schedules provided by its subsidiaries in connection with the preparation of the consolidated financial statements. As a minimum, these schedules include a balance sheet and an income statement, as already required to comply with the provisions of Article 2429 of the Italian Civil Code. The accounting schedules are made available to the public in the manner required by the provisions of Part III, Title II, Section V, of the regulations adopted by the Consob with Resolution No. 11971 of 1999, as amended. b) Its subsidiaries provide it on a regular basis, but always promptly when changes in substance or form occur, with copies of their Bylaws and documents setting forth the composition and powers of their governance bodies. c) It ensures that its subsidiaries: i) provide the Parent Company’s Independent Auditors with the information they need to audit the Parent Company’s annual and interim financial statements; ii) adopt an adequate accounting system that enables them to deliver on a regular basis to the Group’s management and the Parent Company’s Independent Auditors the income statement, balance sheet and financial position data needed to prepare the consolidated financial statements. Consequently, the issuer Diasorin S.p.A. does not believe that it is required to carry out a specific plan to comply with the requirements of Article 39 of the regulations adopted by the Consob with Resolution No. 16191 of October 29, 2007, other than establishing formal procedures for the performance of the activities described above, when such action may be in order.

2008

Report 1 half st

Significant events occurring after june 30, 2008 and business outlook On July 9, 2008, Diasorin signed an agreement to acquire Biotrin, an Irish Group that is the world leader in the diagnosis of maternal-fetal infections caused by Parvovirus. The total value of the transaction amounts to about 25 million euros. Biotrin was founded in 1992 in Dublin, where its research, production and marketing operations are located. It has about 70 employees at a facility registered with the FDA in the United States. In the fiscal year ended October 31, 2007, Biotrin reported consolidated revenues of about 10.3 million euros, consolidated EBIT of about 2.3 million euros (after about 1.0 million euros in amortization of goodwill) and consolidated net profit of about 1.7 million euros. Over the past ten years, Biotrin has gained a global leadership position in the diagnosis of Parvovirus infections, in terms both of its commercial presence (estimated market share of 60%) and of the patents that protect its products in the United States and Europe. With regard to future growth, Biotrin signed a licensing agreements with the National Institutes of Health (NIH) in the United States securing exclusive rights to a series of patents that will be used to develop innovative products to assess the effectiveness of Human Papilloma Virus (HPV) vaccination. Market launch of these products is scheduled for the first quarter of 2009. In connection with this transaction, Interbanca provided the Company with US$56 million in new financing, which was used to fund the Biotrin acquisition and repay an older loan owed to the same financial institution. The new loan is repayable in 10 semiannual installments of the same principal amount, due on June 30 and December 31 of each year, from December 31, 2009 to June 30, 2014. Six-month interest, which will be payable in arrears at the abovementioned maturities, will accrue at a variable rate equal to the six-month USD LIBOR plus a contractually determined spread based on the ratio between net financial position and EBITDA. On July 23, 2008, in a further significant step in the implementation of a strategy of geographic expansion, the Group incorporated Diasorin Austria GmbH. This company will become operational in the fourth quarter of 2008. Subsequent to June 30, 2008, the Diasorin Group continued to report positive operating results: revenues increased, in line with the trend of the first six months of the year, and there were no significant adverse developments with regard to raw material costs.

2008

Report 1 half st

Abbreviated semiannual consolidated financial statements at June 30, 2008

2008

CONSOLIDATED INCOME STATEMENT (in thousands of euros)

Notes

First half 2008

2007

Net revenues

(1)

116,266

102,160

Cost of sales

(2)

(40,879)

(35,765)

Gross profit

75,387

66,395

Sales and marketing expenses

(3)

(22,931)

(21,968)

Research and development costs

(4)

(6,191)

(5,408)

General and administrative expenses

(5)

(12,828)

(11,525)

Other operating income (expenses)

(6)

(798)

(2,875)

non-recurring amount Operating result (EBIT) Net financial income (expense) Result before taxes Income taxes Net Result Earnings per share (basic) Earnings per share (diluted)

(7) (8) (9) (9)

(469) 32,639 (258) 32,381 (12,117) 20,264 0.37 0.37

(2,653) 24,619 (2,114) 22,505 (8,769) 13,736 0.27 0.25

Report 1 half st

CONSOLIDATED BALANCE SHEET (in thousands of euros) ASSETS Non-current assets Property, plant and equipment Goodwill Other intangibles Equity investments Deferred-tax assets Other non-current assets Total non-current assets Current assets Inventories Trade receivables Other current assets Cash and cash equivalents Total current assets TOTAL ASSETS

Notes

6/30/2008

12/31/2007

(10)

32,776

33,946

(11)

48,055

(11)

17,366

17,334

123

8,296

8,667

643

399

107,259

108,524

(12)

36,870

35,485

(13)

62,353

52,163

4,443

3,789

(15)

14,092

8,367

117,758

99,804

225,017

208,328

2008

CONSOLIDATED BALANCE SHEET (continued) (in thousands of euros) LIABILITIES AND SHAREHOLDERS’ EQUITY Shareholders’ equity Share capital Additional paid-in capital Statutory reserve Other reserves Retained earnings (Accumulated deficit) Net result for the year Total shareholders’ equity Non-current liabilities Long-term borrowings Provisions for employee severance indemnities and other employee benefits Deferred-tax liabilities Other non-current liabilities Total non-current liabilities Current liabilities Trade payables Other current liabilities Income taxes payable Current portion of long-term debt Dividends payable Total current liabilities Total liabilities TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

Notes

6/30/2008

12/31/2007

(14)

55,000

(14)

5,925

(14)

1,141

639

(14)

(5,056)

(2,666)

(14)

55,373

36,156

(14)

20,264

25,219

132,647

120,273

(15)

13,271

15,400

(16)

19,234

19,030

925

1,028

(17)

1,843

2,239

35,273

37,697

(18)

27,143

27,716

(19)

12,870

13,847

(20)

6,821

3,697

(15)

4,763

5,098

(15)

5,500

57,097

50,358

92,370

88,055

225,017

208,328

Report 1 half st

CONSOLIDATED CASH FLOW STATEMENT (in thousands of euros)

First half 2008

2007

20,264

13,736

Cash flow from operating activities Net result for the period Adjustments for: - Income taxes - Depreciation and amortization - Financial expense (income) - Additions to/Utilizations of provisions and reserves - (Gains)/Losses on sales of non-current assets - Contributions to/(Reversals of) provisions for employee severance indemnities - and other employee benefits

- non-recurring amount - Changes in shareholdersâ&#x20AC;&#x2122; equity reserves - Stock option reserve - Cumulative translation adjustment from operating activities - Change in other non-current assets/liabilities Cash flow from operating activities before changes in working capital (Increase) Decrease in trade receivables (Increase) Decrease in inventories Increase (Decrease) in trade payables (Increase) Decrease in other current items Cash from operating activities Income taxes paid Interest paid Net cash from operating activities Investments in intangibles Investments in property, plant and equipment Disinvestments Cash used in investing activities Repayment of loans Repayment of other financial obligations Proceeds from new borrowings Foreign exchange translation differences Cash used in financing activities Net change in cash and cash equivalents CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD

12,117

8,769

7,049

7,022

258

2,114

(282)

(75)

184

(444)

(515)

283

600

145

(175)

(737)

39,334

31,645

(10,765)

(8,959)

(1,834)

(3,153)

(467)

4,691

(281)

(1,572)

25,987

22,652

(10,021)

(8,573)

(1,593)

(1,762)

14,373

12,317

(1,083)

(2,408)

(5,639)

(6,104)

395

455

(6,327)

(8,057)

(1,462)

(3,025)

(1,523)

(2,020)

785

1,506

(121)

135

(2,321)

(3,404)

5,725

856

8,367

8,718

14,092

9,574

2008

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (in thousands of euros)

Shareholders’ equity at 12/31/2006

Share Additional Statutory Cumulative capital paid-in reserve translation capital reserve

50,000

4,425

Appropriation of previous year’s profit

207

652

Stock Retained Net result option earnings for the reserve (Accumlaperiod ted deficit) 2,202

432

Share-based payments and other changes

7,957

22,294

87,737

21,862

(22,294)

600

Translation adjustment

600

(264)

Net result for the period

13,736

101,809

36,156

25,219

120,273

24,717

(25,219)

Shareholders’ equity at 6/30/2007

50,000

4,425

639

388

2,802

29,819

Shareholders’ equity at 12/31/2007

55,000

5,925

639

(2,790)

124

Appropriation of previous year’s profit

502

Dividend distribution

(5,500)

Share-based payments and other changes

283

(2,673)

Net result for the period Shareholders’ equity at 6/30/2008

55,000

5,925

1,141

(5,463)

(5,500)

283

Translation adjustment

Group interest in sharehold. equity

407

55,373

20,264

132,647

BREAKDOWN OF TOTAL CONSOLIDATED PROFIT (LOSS) (in thousands of euros) Translation adjustment Profit (Loss) recognized directly in equity Share-based payments Profit for the period Total profit recognized for the year

First half 2008

First half 2007

(2,673)

(2,064)

(2,673)

(2,064)

283

600

20,264

13,736

17,874

12,272

Report 1 half st

Notes to the abbreviated semiannual consolidated financial statements at June 30, 2008 and June 30, 2007 GENERAL INFORMATION AND SCOPE OF CONSOLIDATION General information The Diasorin Group is specialized in the development, manufacture and distribution of products in the immunochemistry and infectious immunology product groups. These product classes can also be grouped into a single family called immunodiagnostics. Diasorin S.p.A., the Group’s Parent Company, has its headquarters on Via Crescentino, in Saluggia (VC) 13040.

Principles for the preparation of the abbreviated semiannual consolidated financial statements These abbreviated semiannual consolidated financial statement were prepared in compliance with the International Financial Reporting Standards (“IFRSs”), as issued by the International Accounting Standards Board (“IASB”) and adopted by the European Union. The designation IFRSs also includes the International Accounting Standards (“IASs”) that are still in effect and all of the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). This semiannual report was prepared in accordance with the requirements of the relevant international accounting standard (IAS 34 – Interim Financial Reporting). These notes provide information in summary form, in order to avoid duplicating information published previously, as required by IAS 34. Specifically, these notes discuss only those components of the income statement and balance sheet the composition or change in amount of which require comment (due to the amount involved or the type of transaction or because an unusual transaction is involved) in order to understand the Group’s operating performance, financial performance and financial position. The accounting principles applied to prepare the consolidated semiannual report are consistent with those used for the annual consolidated financial statements at December 31, 2007, since it has been determined that the revisions and interpretations published by the IASB that were applicable as of January 1, 2008 did not require any material changes in the accounting principles adopted by the Group the previous year. When preparing interim financial statements, management is required to develop estimates and assumptions that affect the amounts shown for revenues, expenses, assets and liabilities in the financial statements and the disclosures provided with regard to contingent assets and liabilities on the date of the interim financial statements. If such estimates and assumptions, which were based on management’s best projections, should differ from actual events, they will be modified appropriately when the relevant events produce the abovementioned differences. Moreover, certain evaluation processes, particularly the more complex processes such as determining whether the value of non-current assets has been impaired, are carried out fully only in connection with the preparation of the annual financial statements, when all the necessary information is available, except when there are impairment indicators that require an immediate evaluation of any impairment losses that may have occurred.

2008

The process of preparing the abbreviated semiannual consolidated financial statements included developing the actuarial valuation required to compute the provisions for employee benefits. With regard to the composition of gross profit, some of the items that were included in last year’s computation have been reclassified in accordance with the presentation criteria adopted this year, which reflect a more accurate allocation of such items, consistent with a sound management approach. The Group engages in activities that, taken as a whole, are not subject to significant seasonal or cyclical shifts in revenue generation during the year. The income tax liability is recognized using the best estimate of the weighted average tax rate projected for the entire year. In this consolidated semiannual report, all amounts are in thousands of euros unless otherwise stated.

Financial statement presentation formats The financial statements are presented in accordance with the following formats:

• In the income statement, costs are broken down by function. This income statement format, also known as a “cost of sales” income statement, is more representative of the Group’s business than a presentation with expenses broken down by nature because it is consistent with internal reporting and business management methods and is consistent with international practice in the diagnostic industry. • In the balance sheet, current and non-current assets and current and non-current liabilities are shown separately. • The cash flow statement is presented in accordance with the indirect method.

Scope of consolidation The consolidated quarterly report includes the financial statements of Diasorin S.p.A., the Group’s Parent Company, and those of its subsidiaries. The scope of consolidation did not change compared with December 31, 2007. Subsidiaries are companies over which the Group is able to exercise control, i.e., it has the power to, directly or indirectly, govern their operating and financial powers so as to obtain benefits from the results of their operations. Subsidiaries are consolidated line by line from the date the Group obtains control until the moment when control ceases to exist. Dormant subsidiaries and subsidiaries that generate an insignificant volume of business are not consolidated. Their impact on the Group’s total assets and liabilities, financial position and bottom-line result is not material. A list of the subsidiaries included in the scope of consolidation, complete with information about head office locations and the percentage interest held by the Group, is provided in Annex I.

Report 1 half st

ANALYSIS OF FINANCIAL RISKS The financial risks to which the Group is exposed include market risk and, to a lesser extent, credit risk and liquidity risk. The Group executed no transactions involving derivatives in the first half of 2008. As required by IAS 39, assets and liabilities of a material amount are listed below: At 6/30/2008 Receiva- Derivative bles hedges

Carrying value

Trade receivables

(13)

62,353

52,163

Cash and cash equivalents

(15)

14,092 76,445 76,445

8,367 60,530 60,530

(Note)

Carrying value

At 6/30/2008 Liabilities Held for at amortized trading cost

Carrying value

(15)

13,271 13,271 27,143 4,763 5,500 37,406 50,677

Total current financial assets Total financial assets

Non-current financial liabilities

Total non-current financial liabilities Trade payables Current portion of long-term debt Dividends payable Total current financial liabilities Total financial liabilities

(18) (15) (15)

13,271 13,271 27,143 4,763 5,500 37,406 50,677

Carrying value

At 12/31/2007 Receiva- Derivative bles hedges

(Note)

At 12/31/2007 Liabilities Held at for amortized trading cost

15,400 15,400 27,716 5,098

32,814 48,214

Risks related to fluctuations in foreign exchange and interest rates Because the Group has not established hedges specifically for this purpose, it is exposed to the interest rate risk in connection with variable-rate financial liabilities. As of the balance sheet date, borrowings that carried variable rates totaled 15,793,000 euros. Management believes that, given this level of debt exposure, even a significant change in interest rates would not have a material impact on the Groupâ&#x20AC;&#x2122;s result. The Group is exposed to the market risk caused by fluctuations in foreign exchange rates because it operates at the international level and executes transactions involving different foreign exchange and interest rates. The Groupâ&#x20AC;&#x2122;s exposure to foreign exchange risks is due to the geographic distribution of its production facilities and of the markets where it sells its products and to the use of external sources to secure financing in foreign currencies.

2008

The Group has not established hedges against fluctuations in foreign exchange rates because, by virtue of its manufacturing organization, it can offset revenues earned in U.S. dollars in the North American market against cost components denominated in the same currency that are incurred by its U.S. subsidiary, thereby establishing automatically a sort of hedge against fluctuations in foreign exchange rates. Moreover, most of the Group’s long-term debt is denominated in U.S. dollars, which provides further protection for its operating and financial results from fluctuations in foreign exchange rates. The Group is not subject to significant risks with regard to other currencies because cash flows in currencies other than the euro and the U.S. dollar are not significant. Some Group subsidiaries are located in countries that are not members of the European Monetary Union (i.e., the United States and Brazil). Since the Group’s reporting currency is the euro, the income statements of these companies are translated into euros at the average exchange rate for the year. Consequently, even if revenues and margins were to remain equal when stated in the local currency, fluctuations in exchange rates could have an impact on the euro amount of revenues, expenses and operating results. The euro amount attributed to the assets and liabilities of consolidated companies that use reporting currencies different from the euro could vary as a result of changes in exchange rates. As required by the accounting principles adopted by Diasorin, these changes are recognized directly in equity by posting them to the currency translation reserve. The Group monitors significant exposures to foreign exchange translation risks. However, no hedges had been established against such exposures as of the date of the financial statements. This is because the potential impact of foreign exchange translation risks on the Group’s equity is not significant.

Credit risk The Group’s receivables present a low level of risk since most of these receivables are owed by public institutions, for which the risk of non-collection is not significant. At June 30, 2008, past-due trade receivables were equal to about 20% of revenues. These receivables were held mainly by the Group’s Parent Company and the Spanish subsidiary, which sell a very high percentage of their products to the local national health service. About 60% of these receivables is more than 120 days old. An allowance for doubtful accounts of 6,076,000 euros has been established in connection with these past-due receivables. In addition, in order to bridge the gap between contractual payment terms and actual collections, the Group assigns its receivables with recourse to factors.

Liquidity risk A prudent cash management strategy includes maintaining sufficient cash or readily available assets, such as credit lines, to meet immediate liquidity needs. Cash flows, funding requirements and liquidity levels are monitored centrally to ensure promptly and effectively the availability of financial resources and invest appropriately any excess liquidity.

Report 1 half st

Management believes that the funds and credit lines currently available, when combined with the resources generated by operating and financing activities, will enable the Group to meet the obligations resulting from its capital investment programs, working capital requirements and the need to repay its indebtedness upon maturity.

Other information Information about significant events occurring after June 30, 2008, the Groupâ&#x20AC;&#x2122;s business outlook and its transactions with related parties is provided in separate sections of this semiannual report. The table below shows the exchange rates used to translate amounts reported by companies that operate outside the euro zone: First half 2008

At December 31, 2007

First half 2007

Average

At 6/30

Average

U.S. dollar

1.5304

1.5764

1.4721

At 6/30

1.3291

1.3505

British pound

0.7752

0.7923

0.7334

0.6746

0.6740

Brazilian real

2.5946

2.5112

2.6108

2.7186

2.5972

Swedish kronor

9.3753

9.4703

9.4415

9.2228

9.2525

Mexican peso

16.2399

16.2298

16.0547

14.5523

14.5706

Israeli shekel

5.3875

5.2820

5.6651

5.5179

5.7416

2008

23,604

36,917

1st half 2007

12,312

65,805

24,357

41,448

1st half 2008

4,231

36,707

4,625

32,082

1st half 2007

4,769

42,098

6,129

35,969

1st half 2008

8,772

29,226

4,247

24,979

1st half 2007

15,095

34,439

4,828

29,611

1st half 2008

977

9,347

1st half 2007

563

9,994

1st half 2008

(809)

(33,641)

(32,476)

(1,165)

1st half 2007

(100)

(36,070)

(35,314)

(756)

1st half 2008

(2,114)

24,619

102,160

1st half 2007

32,639

116,266

1st half 2008

CONSOLIDATED

Revenues from outsiders 60,521 -

ELIMINATIONS

Inter-segment revenues 11,448 -

REST OF THE WORLD

Total revenues -

UNITED STATES

Segment result -

EUROPE

Unallocated common costs -

ITALY

EBIT -

(in thousands of euros)

Other income (expense), net

Amortization

Net result

Income taxes

Result before taxes

(3,236)

(2,622)

(614)

(3,353)

(2,616)

(737)

(2,226)

(2,135)

(91)

(2,207)

(2,111)

(96)

(915)

(811)

(104)

(830)

(730)

(100)

(1,174)

(1,128)

(46)

(1,267)

(1,222)

(45)

529

608

(7,022)

(6,167)

(855)

13,736

(8,769)

22,505

(7,049)

(6,071)

(978)

20,264

(12,117)

32,381

(258)

INCOME STATEMENT

Financial income (expense)

Depreciation

OTHER INFORMATION

Total amortiz. and depreciation

12/31/07

113,487

6/30/08

29,741

56,956

12/31/07

34,905

61,469

6/30/08

4,925

61,351

12/31/07

5,294

70,705

6/30/08

7,951

15,342

12/31/07

8,583

16,394

6/30/08

(40,861)

(47,757)

12/31/07

(52,483)

(59,390)

6/30/08

208,328

120,273

25,222

62,833

208,328

17,156

191,172

12/31/07

225,017

132,647

25,621

66,749

225,017

22,352

202,665

6/30/08

CONSOLIDATED

105,280

113,487

8,583

ELIMINATIONS

70,450

7,951

REST OF THE WORLD

105,280

5,294

UNITED STATES

61,077

4,925

EUROPE

34,905

ITALY

29,741

(in thousands of euros)

Unallocated liabilities

70,450

Segment liabilities

Total assets

Unallocated assets

Segment assets

BALANCE SHEET

Shareholders' equity

61,077

Total liabilities and shareholders' equity

Report 1 half st

DESCRIPTION AND MAIN CHANGES Consolidated income statement The notes to the consolidated income statement are provided below. More detailed information about the components of the income statement is provided in the Report on Operations.

1. Net revenues In the first half of 2008, net revenues, which are generated mainly through the sale of diagnostic kits, totaled 116,266,000 euros, or 13.8% more than in the same period last year. These revenues include equipment rentals and technical support revenues of 2,269,000 euros, compared with 1,785,000 euros in the same period last year.

2. Cost of sales In the first half of 2008, the cost of sales amounted to 40,879,000 euros, compared with 35,765,000 euros in the six months ended June 30, 2007. The cost of sales includes 3,185,000 euros paid for royalties (2,230,000 euros in 2007) and 2,576,000 euros in costs incurred to distribute products to end customers (1,708,000 euros in 2007).

3. Sales and marketing expenses Sales and marketing expenses increased to 22,931,000 euros in the first half of 2008, up from 21,968,000 euros in the same period last year. This item consists mainly of marketing costs incurred to promote and distribute Diasorin products, costs attributable to the direct and indirect sales force and the cost of the technical support offered together with the Group-owned equipment provided to customers in accordance with gratuitous loan contracts.

4. Research and development costs The research and development costs incurred during the first six months of 2008, which totaled 6,191,000 euros (5,408,000 euros in the same period in 2007), included all of the research and development outlays (including the costs incurred to register the products offered for sale and meet quality requirements) that were not capitalized (5,931,000 euros, compared with 5,157,000 euros in the first half of 2007) and the amortization of capitalized development costs (260,000 euros, compared with 251,000 euros in the first six months of 2007). During the first half of 2008, the Group capitalized new development costs amounting to 988,000 euros, down from 1,471,000 euros in the same period last year.

2008

5. General and administrative expenses General and administrative expenses, which totaled 12,828,000 euros in the first half of 2008 (11,525,000 euros in the same period last year), include expenses incurred for corporate management activities, Group administration, finance and control, information technology, corporate organization, and insurance.

6. Other operating income (expenses) Net other operating expenses totaled 798,000 euros, compared with net other operating expenses of 2,875,000 euros in the first half of 2008. Operating charges and expenses that cannot be allocated to specific functional areas are posted to this account. The balance for the first half of 2008 includes 469,000 euros in costs incurred in connection with the acquisition of the Biotrin Group, which was completed after June 30, 2008. In 2007, the balance included the costs incurred to list the Companyâ&#x20AC;&#x2122;s shares on the online stock market, which amounted to 2,653,000 euros.

7. Net financial income (expense) The table below provides a breakdown of financial income and expense: (in thousands of euros) Interest and other financial expense Interest on pension funds Interest and other financial income Net translation adjustment Net financial income (expense)

First half 2008

First half 2007

(1,833)

(2,300)

(452)

(392)

140

183

1,887

395

(258)

(2,114)

In the first six months of 2008, net financial expense totaled 258,000 euros, down from net financial expense of 2,114,000 euros in the same period last year. Interest and other financial expense includes 578,000 euros in interest paid on loans and on amounts owed to leasing companies (1,176,000 euros in the first half of 2007) and 1,045,000 euros in fees on factoring transactions, up from 850,000 euros in the first six months of 2007.

8. Income taxes The income tax expense recognized in the consolidated income statement for the first half of 2008 amounted to 12,117,000 euros, an amount equal to 37.4% of the result before taxes. In the six months ended June 30, 2007, the tax liability was 8,769,000 euros, for a tax rate of 39%. A reduction of the tax rates in Italy and Germany is the main reason for the lower tax burden.

Report 1 half st

9. Earnings per share Basic earnings per share, which are computed by dividing the net result attributable to shareholders by the average number of shares outstanding, amounted to 0.37 euros in the first half of 2008, compared with 0.27 euros in the same period last year. Diluted earnings per share for the first six months of 2008 amounted to 0.37 euros, up from 0.25 euros a year earlier. In the first half of 2008, the financial instruments that are relevant for the computation of earnings per share had no impact on their amount. In 2007, as required by IAS 33, diluted earnings per share reflects the expected impact of the exercise of options, including in the computation the resulting change in the average number of shares outstanding and the full cost of the 2004-2008 Stock Option Plan.

CONSOLIDATED BALANCE SHEET 10. Property, plant and equipment The table below shows the changes that occurred in this account as of June 30, 2008: (in thousands of euros)

Net carrying value at 12/31/07

Additions

Depreciation

Translation adjustment

Retirements and other changes

Net carrying value at 6/30/08

Land and buildings

9,269

128

(350)

(206)

Plant and machinery

7,114

1,142

(1,272)

(78)

(8)

6,898

16,930

4,049

(4,449)

(3)

(440)

16,087

633

320

33,946

5,639

Equipment held by outsiders Other property, plant and equipment Total property, plant and equipment

8,841

(3) (6,071)

950

(290)

(448)

32,776

Amortization

Translation adjustment and other changes

Net carrying value at 6/30/08 48,055

11. Goodwill and other intangible assets A breakdown of intangible assets at June 30, 2008 is as follows: (in thousands of euros)

Goodwill

Net carrying value at 12/31/07

Additions

48,055

Development costs

8,693

988

(260)

(63)

9,358

Other intangibles

8,641

(718)

(10)

8,008

65,389

1,083

(978)

(73)

65,421

Total intangible assets

The increase in development costs reflects the ongoing investment in the project for the new LIAISON XL analyzer, which amounted to 988,000 euros in the first half of 2008. Intangible assets with an indefinite useful life were not tested for impairment, since there were no indications of impairment.

2008

12. Inventories A breakdown of inventories at June 30, 2008 and a comparison with the data at December 31, 2007 is as follows: (in thousands of euros)

6/30/2008

12/31/2007

Gross amount

Provisions for writedowns

Net amount

Gross amount

Provisions for writedowns

Net amount

Raw materials and supplies

12,103

(1,113)

10,990

11,783

(1,195)

10,588

Work in progress

16,660

(1,534)

15,126

15,726

(1,380)

14,346

Finished goods

11,758

(1,004)

10,754

11,698

(1,147)

10,551

Total

40,521

(3,651)

36,870

39,207

(3,722)

35,485

The rise in inventories compared with December 31, 2007 reflects a corresponding increase in the Groupâ&#x20AC;&#x2122;s business activity.

13. Trade Receivables Trade receivables totaled 62,353,000 euros at June 30, 2008. The increase compared with December 31, 2007 (52,163,000 euros) is consistent with the higher sales volume reported by the Group. At June 30, 2008, the allowance for doubtful accounts amounted to 6,076,000 euros. The table below shows the changes that occurred in the allowance for doubtful accounts: (in thousands of euros) Opening balance Additions for the period Utilizations and reversals for the period Currency translation differences and other changes Closing balance

6/30/2008

12/31/2007

5,938

5,934

571

(7)

(697)

130

6,076

5,938

14. Shareholdersâ&#x20AC;&#x2122; equity Share capital The fully paid-in share capital consists of 55 million registered shares, par value 1 euro each.

Report 1 half st

Additional paid-in capital This account, which has a balance of 5,925,000 euros, was established in 2003. In 2007, it increased by 1,500,000 euros due to the exercise of options awarded under the 2004-2008 Stock Option Plan. Statutory reserve This reserve amounts to 1,141,000 euros. The appropriation of the 2007 net profit accounts for the increase compared with December 31, 2007. Other reserves A breakdown of other reserves is as follows: (in thousands of euros) Currency translation reserve Stock option reserve Total

6/30/2008

12/31/2007

(5,463)

(2,790)

407

124

(5,056)

(2,666)

The currency translation reserve reflects differences generated by the translation at year-end exchange rates of the shareholdersâ&#x20AC;&#x2122; equities of consolidated companies whose financial statements are denominated in foreign currencies. The main reason for the decrease of 2,673,000 euros, compared with December 31, 2007, is a change in the U.S. dollar exchange rate. The balance in the stock option reserve refers to the 2007-2012 Stock Option Plan. The change that occurred in this reserve in the first half of 2008 reflects the recognition of share-based payments amounting to 283,000 euros. Retained earnings (Accumulated deficit) A breakdown of this item is as follows: (in thousands of euros) Retained earnings/(Accumulated Deficit) IFRS transition reserve Consolidation reserve Total retained earnings (Accumulated Deficit)

6/30/2008

12/31/2007

57,479

38,262

(2,973)

867

55,373

36,156

At June 30, 2008, retained earnings had increased by 19,217,000 euros as the net result of the appropriation of the consolidated net profit earned by the Group in 2007 (24,717,000 euros) and the distribution of dividends totaling 5,500,000 euros. The IFRS transition reserve was established on January 1, 2005, upon first-time adoption of the IFRSs as an offset to the adjustments recognized to make the financial statements prepared in accordance with Italian accounting principles con-

2008

sistent with IFRS requirements, net of the applicable tax effect (as required by and in accordance with IFRS 1). This reserve has not changed since it was first established. The consolidation reserve of 867,000 euros reflects the negative difference generated by the process of offsetting the carrying amounts of equity investments against the corresponding shareholders’ equities.

15. Borrowings The table below lists the borrowings outstanding at June 30, 2008 and provides a comparison with the data at December 31, 2007 (amounts in thousands of euros): Ente erogatore

Balance at June 30, 2008

Balance at Change in the first Dec. 31, 2007 half of 2008

Interbanca USD

4,745

5,645

(900)

Interbanca Euro

6,864

7,627

(763)

999

945

CRT Unicredit for 2000 Flood

1,242

1,359

(117)

Lessors

4,184

4,745

(561)

IMI/Italian Ministry of Education

Factors Total

177

(177)

18,034

20,498

(2,464)

During the first half of 2008, borrowings decreased by 2,464,000 euros as a result of reimbursements and translation differences on borrowings in foreign currencies. Specifically, 763,000 euros and US$833,000 (equal to 530,000 euros) were repaid on the Interbanca euro loan and Interbanca U.S. dollar loan, respectively. In addition, 164,000 euros were repaid on the CRT Unicredit for the Flood facility and indebtedness owed to lessors was reduced by 1,346,000 euros. New finance leases totaling 785,000 euros were executed during the first six months of 2008. The table below provides a breakdown of borrowings by maturity (in thousands of euros): Lender institution IInterbanca USD

Currency

Short-term amount

Long-term amount

Amount due after 5 years

Total

1,666

5,812

7,478

Controvalore €

1,058

3,687

4,745

Interbanca Euro

€

1,536

5,328

6,864

IMI/Italian Ministry of Education

€

999

459

999

CRT Unicredit for 2000 Flood

€

342

900

1,242

Lessors

€

1,827

2,357

4,184

4,763

13,271

459

18,034

Total

Report 1 half st

There were no changes in contract terms compared with December 31, 2007 and Diasorin was in compliance with all of the operating and financial covenants of the existing loan agreements. Other financial liabilities include a payable of 5,500,000 euros for dividends declared upon the appropriation of the 2007 earnings, which were payable as of July 17, 2008. A breakdown of net borrowings at June 30, 2008 is as follows: (in thousands of euros) Cash and cash equivalents Liquid assets (a) Current bank debt Dividends payable Other current financial obligations Current indebtedness (c) Net current indebtedness (d)=(a)+(b)+(c) Non-current bank debt Other non-current financial obligations Non-current indebtedness (e) Net borrowings (f)=(d)+(e)

At June 30, 2008

At December 31, 2007

(14,092)

(8,367)

(14,092)

(8,367)

2,936

3,001

5,500

1,827

2,097

10,263

5,098

(3,829)

(3,269)

10,914

12,575

2,357

2,825

13,271

15,400

9,442

12,131

A breakdown of the changes in the Group’s liquid assets is provided in the statement of cash flow.

16. Provision for employee severance indemnities and other employee benefits The balance in this account reflects all of the Group pension plan obligations, other post-employment benefits and benefits payable to employees when certain requirements are met. Group companies provide post-employment benefits to their employees by contributing to external funds and by funding defined-contribution and/or defined-benefit plans. The manner in which these benefits are provided varies depending on the applicable statutory, tax-related and economic conditions in the countries where Group companies operate. As a rule, benefits are based on each employee’s level of compensation and years of service. The Group’s obligations refer to the employees currently on its payroll. Defined-contribution plans Certain Group companies pay contributions to private funds or insurance companies pursuant to a statutory or contractual obligation or on a voluntary basis. With the payment of these contributions, the companies in question absolve all of their obligations. The liability for contributions payable is included under “Other current liabilities.” The cost attributable to each year, which accrues based on the services provided by employees, is recognized as a labor cost of the relevant organizational unit. In the first half of 2008, this cost amounted to 731,000 euros (1,383,000 euros in the first half of 2007).

2008

Defined-benefit plans The Groupâ&#x20AC;&#x2122;s pension plans that qualify as defined-benefit plans include the provisions for employee severance indemnities in Italy, the Alecta system in Sweden and the U-Kasse pension plan and Direct Covenant system in Germany. The liability owed under these plans is recognized at its actuarial value using the projected unit credit method. Any resulting actuarial gains or losses are recognized in accordance with the Corridor Method. Other employee benefits The Group also provides its employees with additional long-term benefits, which are paid when employees reach a predetermined length of service. In these cases, the value of the liability recognized in the financial statements reflects the probability that these benefits will be paid and the length of time for which they will be paid. The liability owed under this plan is recognized at its actuarial value using the projected unit credit method. In this case, the Corridor Method is not applied to any resulting actuarial gains or losses.

The table that follows summarizes the Groupâ&#x20AC;&#x2122;s main employee benefit plans that are currently in effect: (in thousands of euros)

Value at 6/30/2008

Value at 12/31/2007

Change in the first half of 2008

5,721

5,961

(240)

11,297

11,032

265

1,817

1,782

399

255

144

19,234

19,030

204

5,038 13,113 18,151 1,083 19,234

5,248 12,814 18,062 968 19,030

(210) 299 89 115 204

Employee benefits

provided in: - Italy - Germany - Sweden - Other Total employee benefits broken down as follows: - Defined-benefit plans Provision for employee severance indemnities Other defined-benefit plans - Other long-term benefits Total employee benefits

Report 1 half st

The table below shows a breakdown of the main changes that occurred in the Groupâ&#x20AC;&#x2122;s employee benefit plans in the first half of 2008: (in thousands of euros) Balance at December 31, 2007 Financial expense/(income) Actuarial losses/(gains) Service costs Contribution/Benefits paid Currency translation differences and other changes Balance at June 30, 2008

Defined-benefit plans

Other benefits

Total employee benefits

18,062

968

19,030

435

452

(26)

163

210

(388)

(39)

(427)

(5)

18,151

1,083

19,234

17. Other non-current liabilities Other non-current liabilities, which totaled of 1,843,000 euros at June 30, 2008, refer to provisions for risks and charges. The table below shows the changes compared with the first half of 2007: (in thousands of euros) Balance at January 1 Additions for the period Utilizations/Reversals for the period Currency translation differences and other changes Balance at June 30

6/30/2008

12/31/2007

2,239

2,819

688

(496)

(1,353)

1,843

2,239

Utilizations of 96,000 euros and reversals of 400,000 euros refer to changes in the provision for risks on legal disputes recognized upon the settlement of a tax dispute by Diasorin S.p.A., the Groupâ&#x20AC;&#x2122;s Parent Company.

18. Trade payables Trade payables, which totaled 27,143,000 euros at June 30, 2008, represent amounts owed to suppliers for purchases of goods and services. There are no liabilities due after one year.

19. Other current liabilities Other current liabilities of 12,870,000 euros consist mainly of amounts owed to employees for bonuses and contributions payable to social security and health benefit institutions.

2008

20. Income taxes payable The balance of 6,821,000 euros represents the income tax liability for the profit earned in the first half of 2008, less estimated payments made.

21. Commitments and contingent liabilities Other significant commitments and contractual obligations Significant contractual obligations include the agreements executed by Diasorin S.p.A., the Groupâ&#x20AC;&#x2122;s Parent Company, and Stratec in connection with the development and production of a chemiluminescence diagnostic system (called LIAISON XL). The supply contract signed by Diasorin and Stratec calls for the latter to manufacture and supply exclusively to Diasorin the LIAISON XL analyzer. The projected commitment is deemed to be significantly lower than the normal level of capital investment that would be required for current or future equipment production. As a result, net invested capital is not expected to undergo significant structural changes in the future as a result of this commitment. Contingent liabilities The Diasorin Group operates globally. As a result, it is exposed to the risks that arise from the complex laws and regulations that apply to its commercial and manufacturing activities. The Group believes that, overall, the amounts set aside for pending legal disputes in the corresponding provision for risks are adequate.

22. Entries resulting from atypical and/or unusual transactions As required by Consob Communication No. DEM/6064296 of July 28, 2006, the Company declares that, in the first half of 2008, the Group did not execute atypical and/or unusual transactions, as defined in the abovementioned Communication, which defines atypical and/or unusual transactions as those transactions that, because of their significance/material amount, type of counterpart, subject of the transaction, method of determining the transfer price and timing of the event (proximity to the end of a reporting period), could create doubts with regard to: the fairness/completeness of the financial statement disclosures, the existence of a conflict of interest, the safety of the corporate assets and the protection of minority shareholders.

Report 1 half st

Annex I: The companies of the Diasorin Group at June 30, 2008 Company

Head office location

Currency

Share capital

Par value per share or partnership interest

% interest held directly

Diasorin S.A.

Brussels (Belgium)

Euro

1,674,000

6,696

99.99%

Diasorin Ltda

S達o Paulo (Brazil)

BRL

10,011,893

99.99%

Diasorin S.A.

Antony (France)

Euro

960,000

99.99%

Diasorin Iberia S.A.

Madrid (Spain)

Euro

1,453,687

99.99%

Diasorin Ltd

Wokingham (Great Britain)

GBP

500

100.00%

Diasorin Inc.

Stillwater (United States)

USD

0.01

100.00%

Diasorin Mexico S.A de C.V.

Mexico City (Mexico)

MXP

100,000

99.99%

Diasorin Deutschland GmbH

Dietzenbach (Germany)

Euro

275,000

100.00%

5,000,000

100

100.00%

100

100.00%

Diasorin AB

Sundyberg (Sweden)

SEK

Diasorin Ltd

Rosh Haayin (Israel)

ILS

Equity Investments Valued at Cost Diasorin Ltd

Shanghai (China)

Euro

120,000

80.00%

Byk Sangtec Diagnostica Unterstuetzungskasse Gmbh

Dietzenbach (Germany)

Euro

25,565

100.00%

Euro

5,000

Partecipazioni in altre imprese Consorzio Sobedia

Saluggia (Italy)

20.00%

2008

Report 1 half st

CERTIFICATION of the abbreviated semiannual consolidated financial statements pursuant to Article 81-ter of Consob Regulation No. 11971 of May 14, 1999, as amended We, the undersigned, Carlo Rosa, in my capacity as Chief Executive Officer, and Andrea Alberto Senaldi, in my capacity as Officer Responsible for the preparation of corporate financial reports of Diasorin S.p.A.,

attest that, insofar as the provisions of Article 154-bis, Sections 3 and 4, of Legislative Decree No. 58 of February 24, 1998 are concerned, the administrative and accounting procedures applied during the first half of 2008 to prepare the semiannual financial report are: a) adequate in light of the Companyâ&#x20AC;&#x2122;s characteristics; and b) were applied effectively. Moreover, we certify that the abbreviated semiannual consolidated financial statements at June 30, 2008: a) correspond to the book of accounts and bookkeeping entries of the Company; b) were prepared in accordance with the international accounting principles (IAS/IFRS), as required by Article 154-ter, Section 5, of the Uniform Finance Law (Legislative Decree No. 58/1998), and, to the best of our knowledge, are suitable for the purpose of providing a truthful and fair representation of the balance sheet, operating performance and financial position of the issuer and of the companies included in the scope of consolidation.

Saluggia, August 8, 2008

Chief Executive Officer

Officer Responsible for the preparation of corporate financial reports

Carlo Rosa

Andrea Alberto Senaldi

2008

Analysis of the operating performance and financial position of Diasorin S.p.A. Foreword Pending the enactment of the decrees required to implement Directive No. 2004/109/CE on Transparency, which states that the inclusion of the financial statements of a group’s parent company in the disclosures provided with the semiannual report is not required, a brief review of the operating and financial results of Diasorin S.p.A. was still included in this Report to provide more comprehensive information, it being understood that the corresponding data have not been audited. Consistent with the practice followed for the Diasorin Group, the financial statements provided on the pages that follow were prepared in accordance with the International Financial Reporting Standards (IFRSs) published by the International Accounting Standards Board (“IASB”).

Operating performance in the first half of 2008 In the first half of 2008, the Group’s Parent Company increased revenues by 5,283,000 euros compared with the same period last year, equal to a gain of 8.7% at current exchange rates. This improvement was made possible by the combined effect of a steady increase in sales of CLIA technology products in the domestic market and a rise in the revenues generated through independent distributors in such developing markets as Russia and the other countries of eastern Europe. In the first half of 2008, the gross profit amounted to 32,607,000 euros, or 342,000 euros more than a year earlier. However, the ratio of gross profit to revenues decreased, reflecting the impact of a reduction in the value of the U.S. dollar versus the euro and of the larger percentage of total revenues generated by distributors. At June 30, 2008, EBITDA totaled 15,664,000 euros, an amount equal to 23.8% of revenues. The Parent Company’s consolidated operating result (EBIT) increased from 10,977,000 euros in the first half of 2007 to 12,312,000 euros in the same period this year, for a gain of 1,335,000 euros. Both in 2007 and 2008, EBITDA and EBIT figures include the impact of non-recurring income and expense items: in the first half of 2007, the Company incurred charges in connection with the listing of its shares on the Online Stock Market, offset in part by an extraordinary gain generated by the reform of the severance benefit system; in 2008, non-recurring charges were incurred in connection with the acquisition of the Biotrin Group, which was completed on July 9, 2008. Restated without extraordinary items, EBITDA and EBIT for the first half of 2008 amount to 16,133,000 euros and 12,781,000 euros, respectively. At June 30, 2008, the Parent Company reported a net result of 9,125,000 euros, an amount equal to 13.9% of revenues, for a gain of 3.3 percentage points over the previous year, including the impact of the extraordinary items mentioned above.

Report 1 half st

Financial statements of Diasorin S.p.A. at June 30, 2008 and 2007

2008

INCOME STATEMENT (*) (in thousands of euros)

First half 2008

amount with related parties

2007

amount with related parties

Net revenues

65,805

24,357

60,522

23,604

Cost of sales

(33,198)

(12,404)

(28,257)

(12,536)

Gross profit

32,607

32,265

Sales and marketing expenses

(8,699)

Research and development costs

(4,316)

General and administrative expenses

(6,854)

(1,177)

(6,429)

(1,373)

(426)

(173)

(2,835)

(201)

Other operating income (expenses)

non-recurring amount Operating result (EBIT) Net financial income (expense)

(430)

(8,421)

(469)

(2,653)

12,312

10,977

923

(441)

(389)

Result before taxes

13,235

10,588

Income taxes

(4,110)

(3,611)

Net Result

9,125

6,977

(*) Unaudited data.

(258)

(3,603)

1,657

Report 1 half st

BALANCE SHEET (*) (in thousands of euros)

6/30/2008

amount with related parties

12/31/2007

amount with related parties

ASSETS

Non-current assets Property, plant and equipment Goodwill Other intangibles Equity investments Deferred-tax assets Total non-current assets Current assets Inventories Trade receivables Loans receivable Other current assets Cash and cash equivalents Total current assets TOTAL ASSETS

13,148

13,288

27,591

15,349

15,256

52,052

2,447

2,853

110,587

111,040

23,862

23,219

37,887

7,599

31,030

4,901

11,274

9,952

2,992

2,239

8,875

3,834

84,890

70,274

195,477

181,314

(*) Unaudited data.

2008

BALANCE SHEET (*) (continued) (in thousands of euros)

6/30/2008

amount with related parties

12/31/2007

amount with related parties

LIABILITIES AND SHAREHOLDERS’ EQUITY

Shareholders’ equity Share capital Additional paid-in capital Statutory reserve Other reserves Retained earnings (Accumulated deficit) Net result for the year Total shareholders’ equity Non-current liabilities Long-term borrowings Provisions for employee severance indemnities and other employee benefits Other non-current liabilities Total non-current liabilities Current liabilities Trade payables Other current liabilities Income taxes payable Current portion of long-term debt Dividends payable Total current liabilities Total liabilities TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (*) Unaudited data.

55,000

5,925

1,141

639

320

22,899

18,864

9,125

10,037

94,410

90,562

11,558

13,592

5,721

5,961

868

1,301

18,147

20,854

24,513

2,224

26,524

3,161

6,449

270

7,249

281

4,114 42,344

2,417 38,674

33,708

5,500 82,920

69,898

101,067

90,752

195,477

181,314

29,994

Report 1 half st

CASH FLOW STATEMENT (*) (in thousands of euros)

First half 2008

2007

9,125

6,977

Cash flow from operating activities Net result for the period Adjustments for: - Income taxes

4,110

3,611

- Depreciation and amortization

3,352

3,236

- Financial expense (income)

(923)

389

- Additions to/Utilizations of provisions and reserves

(261)

- (Gains)/Losses on sales of non-current assets

(179)

(52)

(8)

(344)

(515)

- Contributions to/(Reversals of) provisions for employee severance indemnities - and other employee benefits

- non-recurring amount - Changes in shareholdersâ&#x20AC;&#x2122; equity reserves - Stock option reserve - Change in other non-current assets/liabilities Cash flow from operating activities before changes in working capital (Increase) Decrease in trade receivables (Increase) Decrease in inventories Increase (Decrease) in trade payables (Increase) Decrease in other current items Cash from operating activities Income taxes paid Interest paid Net cash from operating activities Investments in intangibles Investments in property, plant and equipment Disinvestments Cash used in investing activities Repayment of loans Repayment of other financial obligations Proceeds from new borrowings Dividends received from Group companies Foreign exchange translation differences Cash used in financing activities Net change in cash and cash equivalents CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD

223

471

(463)

(590)

14,976

13,769

(6,933)

(3,886)

(643)

(2,411)

(2,011)

3,394

(1,135)

(675)

4,254

10,191

(2,586)

(3,718)

(1,839)

(1,543)

(171)

4,930

(830)

(2,163)

(2,718)

(1,991)

422

228

(3,126)

(3,926)

6,199

(2,901)

(352)

(342)

965

2,466

(24)

8,338

(2,302)

5,041

610

3,834

3,350

8,875

3,960

(*) Unaudited data.

2008

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (*) (in thousands of euros)

Shareholders’ equity at 12/31/2006

Share Additional capital paid-in capital

50,000

4,425

Appropriation of previous year’s profit

Statutory reserve

207

Stock Retained Net result option earnings for the reserve (Accumlaperiod ted deficit) 1,728

432

6,243

10,383

9,951

(10,383)

Share capital increase

72,986 -

Share-based payments

471

Net result for the period Shareholders’ equity at 6/30/2007

50,000

4,425

639

2,199

Shareholders’ equity at 12/31/2007

55,000

5,925

639

Appropriation of previous year’s profit

502

Dividend distribution

6,977

16,194

6,977

80,434

18,864

10,037

90,562

9,535

(10,037)

(5,500)

Share capital increase

Share-based payments

223

Net result for the period Shareholders’ equity at 6/30/2008

Group interest in sharehold. equity

55,000

5,925

1,141

320

22,899

9,125

94,410

(*) Unaudited data.

BREAKDOWN OF TOTAL CONSOLIDATED PROFIT (LOSS) (*) (in thousands of euros) Share-based payments Profit for the period Total profit recognized for the year

First half 2008

First half 2007

223

471

9,125

6,977

9,348

7,448

(*) Unaudited data.

Andrea Alberto Senaldi, in his capacity as the Officer Responsible for the preparation of corporate financial reports of Diasorin S.p.A., in accordance with the second subsection of Art. 154-bis, of the Uniform Finance Code, declares that, to the best of his knowledge, the financial information included in the “Financial statements at June 30, 2008 and 2007 of Diasorin S.p.A.” corresponds to the book of accounts and bookkeeping entries of the Company.

Report 1 half st

2008